The 2nd US Circuit Court of Appeals in Manhattan has confirmed the decision to keep Sam Bankman-Fried, the former cryptocurrency billionaire, in custody until his trial. Bankman-Fried faces charges related to the November 2022 collapse of his FTX exchange, with his trial scheduled to begin on October 3.
The appeals court supported US District Judge Lewis Kaplan’s assessment that Bankman-Fried likely attempted to tamper with witnesses. This included sharing personal writings of Caroline Ellison, ex-CEO of Alameda Research hedge fund, with a New York Times reporter. Ellison, who has pleaded guilty to fraud charges, is expected to testify against Bankman-Fried, with whom she had a previous romantic relationship.
Judge Kaplan had initially revoked Bankman-Fried’s $250 million bail on August 11. The appeals court judges rejected Bankman-Fried’s defense that his communication with the press was protected under the First Amendment, stating that speech used to commit a criminal offense like witness tampering is not constitutionally protected.
Bankman-Fried faces seven counts of fraud and conspiracy due to the downfall of FTX. Prosecutors allege he misused billions of dollars in FTX customer funds for various purposes, including covering losses at Alameda, purchasing luxury real estate, and funding political campaigns in the US. Bankman-Fried has entered a plea of not guilty, acknowledging failures in risk management.
Bankman-Fried has expressed difficulties in preparing for his trial due to limited internet access at the Metropolitan Detention Center in Brooklyn.
In a related ruling, Judge Kaplan limited Bankman-Fried’s ability to call expert witnesses during the trial. The court denied permission for three proposed expert witnesses, citing irrelevance or potential jury confusion. However, Kaplan indicated that Bankman-Fried might call the remaining four experts, but only to counter the prosecution’s witnesses. The court papers had suggested that Bankman-Fried’s lawyers intended to use expert testimony to argue that FTX’s terms of service did not prohibit the use of customer funds for investments, a practice reportedly common in the cryptocurrency industry.
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